For every maker
Can you afford this sale?
Black Friday, a craft fair special, a shop asking for twenty percent off. A discount comes off the price, not off what the thing cost you to make, so it takes far more out of what you keep than it looks. This says how much, before you print the sign.
The item
Two numbers and a channel. The craft calculators give you the second one.
Materials, your time, overhead and packaging. A rough number still tells you a lot.
6.5% transaction + 3% & $0.25 payment processing + $0.20 listing
What a sale does
Selling through Etsy
Put in what you charge and what one costs to make, and this will say what a discount does to what you keep.
Nothing here is saved. Not sure what one costs you to make? The calculators work it out, and hand the number straight back here.
Why 20% off the price is not 20% off your profit
Say a bar of soap sells for $12 and costs you $6 to make, everything counted. You keep $6. Put it on sale at 20% off and it sells for $9.60. It still cost $6 to make, so now you keep $3.60. The price dropped by a fifth; what you earn dropped by two fifths.
That is the whole trick, and it catches nearly everyone. A discount is taken off the price, but your costs do not go on sale with it, so every dollar of discount comes straight out of your profit. The thinner your margin to begin with, the bigger the share of it a small discount eats. A maker pricing at twice cost gives away half their profit with a 25% sale.
Selling fees soften it slightly, because a percentage fee shrinks when the price does. Flat fees do not. The checker above does that arithmetic with your own channel's rates rather than a rule of thumb.
The number that matters: how many more you have to sell
The question a sale has to answer is not "will I sell more?" but "will I sell enough more?" If a 20% discount leaves you $3.60 a bar instead of $6, you need to sell five bars on sale to make what three made at full price. Sell only four and the sale lost you money, however busy the stall looked.
The checker gives you that number for your item: how many sale items it takes to earn what one full-price sale earns. Compare it with what you honestly expect the discount to do. A sale that moves a third more units sounds like a success and is very often a loss.
This is also why a discount on something that barely pays is a gift rather than a sale. If an item keeps you $1 at full price, no discount can be made up in volume, and the checker will say so.
Free shipping is a discount with a different name
"Free shipping over $35" is a discount of whatever the shipping costs you, and it comes out of the same place. If postage and a box run to $6 on a $30 order, that is a 20% discount that never appears on the price tag.
To see what it does, put the shipping cost into the checker as a percentage of the price. Then decide whether to fold it into the price instead, which is what most makers who offer free shipping end up doing once they have seen the number.
Ways to make a sale without cutting the price
A discount is the bluntest tool in the box, and there are sharper ones. A bundle (three bars for the price of two and a half) gives the buyer a deal while raising the order size, so the margin you give up on the third bar is paid for by selling two you might not have. A gift with purchase costs you a cheap item instead of a slice of every sale.
Seconds and end-of-line stock can be discounted hard without setting a precedent, because everyone understands why. And a minimum order for a wholesale discount means the discount buys you volume, which is the only reason to give one.
Whatever you pick, the checker answers the same question: at this price, what do you keep, and how many do you have to sell to come out level.
Questions makers ask
How much discount can I afford to give on handmade items?
As much as leaves you a profit worth having after fees, which depends entirely on your margin. An item priced at four times its cost can usually take 25% off and still pay; an item priced at twice its cost cannot. Put your own price and cost into the checker above and it tells you the deepest discount that still breaks even, and what a smaller one does to what you keep.
Should I do Black Friday discounts on handmade products?
Only if the extra sales will cover what the discount costs you, and the checker tells you how many that is. For most handmade sellers a modest bundle or a gift with purchase does more good than a percentage off, because the buyers who want handmade work at Black Friday prices were never going to pay full price anyway. If you do discount, decide the number from your margin, not from what the big shops are doing.
Does a discount reduce my Etsy fees?
Partly. Etsy's transaction and payment fees are a percentage of the sale price, so they fall when the price does. The listing fee and the flat part of the payment fee do not. The checker uses both parts of your channel's fee, so the figure it shows for what you keep is after the real fee on the sale price.
How do I work out what one item costs me to make?
Materials, packaging, your own time at an hourly rate, and a share of overhead like power and tool wear, added up for a batch and divided by how many the batch makes. The free calculators on this site do exactly that for candles, soap, resin, baking and jewelry, and each one links to this checker with the number already filled in.
The rest of the arithmetic, from wholesale terms to what to pay yourself an hour, is in the pricing guides.